TMI Blog2012 (8) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent. ORDER N.K Saini, Accountant Member This is an appeal filed by the assessee against the order dated 8.12.2010 of the learned Commissioner of Income-tax (Appeals) - V, Bangalore. 2. The following grounds have been raised in this appeal : "1. The order of the learned CIT(A)-V is not justified in law and on facts and circumstances of the case. 2. The learned CIT(A) is not justified in denying the benefit of sec. 80IB(10) to the appellant although the appellant satisfied all the requisite conditions in respect thereof. 3. The learned CIT(A) is not justified in holding that sec. 80IB(10) is applicable only to an undertaking involved in developing and construction by ignoring the legal position that sec. 80IB(10) is applicable to an undertaking of developing and building housing project and not developing and construction of housing project. 4. The lower authorities have failed to appreciate that sec. 80IB(10) does not require that the assessee himself should construct the housing project and it is sufficient if he undertakes the activity of developing and building the housing project. 5. The lower authorities have failed to appreciate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken by the assessee. The AO noticed that the assessee is a land developer and converted his land at survey No. 26/1, Volagerahalli, Kengeri Hobli, Bengaluru South Taluk. measuring 1 acre and 31 guntas on 1.9.2003 by putting the same for development by entering into joint development agreement on 3/11/2003 with M/s Reddy Structures Pvt. Ltd and offered the capital gain for tax u/s 45(2) of the Act in the year in which the complete stock in trade was sold. The AO pointed out that the assessee had entered into a joint development agreement with M/s Reddy Structures Pvt. Ltd., for development of the schedule property as per the terms and conditions contained in the joint development agreement. According to the AO, the joint development agreement clearly specifies that the assessees contribution towards the project at survey No. 26/1, Volagerahalli, Kengeri Hobli, Bengaluru South Talulk. was only contributing the land and incurring expenses for statutory approval. The AO was of the view that the deduction u/s 80IB(10) should not be allowed to the assessee since he was only a land owner and the said land was transferred to M/s Reddy Structures Pvt. Ltd. for joint development and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o look into any other criteria to say, whether the house building project was fully owned or co-owned or jointly undertaken or carried out on partnership basis or in any other pattern. It was accordingly submitted that the assessee was very much entitled for the deduction provided u/s 80IB(10) of the Act. 5. The learned CIT(A) after considering the submissions of the assessee observed that the deduction u/s 80IB(10) of the Act was available to any undertaking involved in development and construction of the housing project. But in the present case, the assessee was not involved in the development and construction of the housing project and only contributed land for the purposes of the project, therefore, he was not entitled for the said deduction. He accordingly confirmed the addition made by the AO. 6. Now the assessee is in appeal before us. 7. The learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee converted his agricultural land into non agricultural land and then converted into stock-in-trade on 1.9.2003 by putting the same for development by entering into joint development agreement w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 (Kar.). Copy of the said order was furnished. 8. In his rival submissions, the learned DR strongly supported the orders of the authorities below and further submitted that the assessee had not made any payment relating to the construction activity and it was the responsibility of the assessee to get electricity and water connection because the ownership was lying with him, therefore, only on this basis that the assessee made the payment for electricity and water connection, it cannot be held that the assessee incurred expenses for development of the housing project and was eligible for deduction u/s 80IB(10) of the Act. It was further stated that the assessee only contributed the land for the project, therefore, he was not eligible to have the deduction u/s 80IB(10) of the Act. 9. We have considered the submissions of both the parties and carefully gone through the materials available on record. In the present case, it is not in dispute that the assessee was a land developer and this fact has also been admitted by the AO in para 2 of the assessment order dated 31.12.2008. The assessee entered into agreement with M/s Reddy Structures Pvt. Ltd., for development of housing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building proportionally as per their respective shares." 11. From the above clause, it is clear that the assessee contributed his property in lieu of capital contribution for joint development and construction and the second party i.e. M/s Reddy Structures Pvt. Ltd., was required to make investment for joint development and construction, whereas the assessee was required to make investment on schedule property but the assessee was required to make investment for all statutory approvals including BWSSB, KEB, plan sanction etc. and in such type of cases, the approval and plan sanction is the first and initial stage which was to be taken by the assessee and for that purpose the assessee was required to make investments. So, it cannot be said that the assessee did not make any investment for the project under consideration. 12. In the present case, the AO denied the deduction to the assessee by stating that the assessee only contributed the land and had not carried out any construction activities. Now, we have to analyze the provision contained in sec. 80IB(10) of the Act. The said provision read as under : "The amount of deduction in the case of an undertaking developing and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sanctioned. On a similar issue, their lordships of Hon'ble Jurisdictional High Court in the case of Shravanee Constructions ( supra ) at para 8 of the judgment dated 28th Feb., 2012 in ITA No. 421 and 422 of 2009 observed as under : "In terms of the agreement, which are not in dispute, the assessee not only undertook the aforesaid development activities on the land in question, but in fact, he entered into an agreement of sale with the owners of the land, paid the entire consideration but he did not take a registered sale deed in his name. On the contrary, the procedure adopted is he in turn entered into a joint development agreement with the builder and the owner of the land was made a party to the said proceedings. Thus, the assessee contributed the land, undertook the aforesaid development activities in the said land and thus, complied with all other conditions, which have to be fulfilled before claiming benefit u/s 80IB(10) of the Act. The builder has invested the money in the construction. It is after completion of the building in terms of the agreement, the assessee was given 22% share of the building area. It is after sale of the built area, in terms of sec. 80IB(10), th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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